Q4 2021 Nextech Ar Solutions Corp Earnings Call

March 22, 2022

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Last name is Smith S M I T H.

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Good afternoon, ladies and gentlemen. Welcome, everyone, to the Next Tech AR Solutions Corporation 2021 fourth quarter and annual results conference call.

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Your line is now.

All lines have been placed on mute to prevent any background noise.

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Mhm.

After the speaker's remarks, there will be question and answer sessions.

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Instructions will be provided at that time for you to queue up for questions.

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Speaker Change: I'd like to remind everyone that this call is being recorded today, Tuesday, March 22nd, 2022.

Yes.

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Speaker Change: I will now turn the call over to Ms. Lindsay Betts, Head of Investor Relations at Nexstech AR Solutions Corporation.

Lindsay Betts: Good afternoon and welcome to the Nextech Q4 Earnings call. With me on the call are Evan Gapleberg, Chief Executive Officer, and Andrew Chan, Chief Financial Officer.

Lindsay Betts: Today, after markets closed, Nextech AR Solutions Corp. released its financial results for the fourth quarter and year ended December 31, 2021. A copy of the earnings disclosure is available on our website and on CDAR.

Lindsay Betts: Some of the information disclosed on this call is based on information as of today, March 22, 2022, and offers four looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements.

Yes.

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Lindsay Betts: For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings press release, as well as in our CDAR filing.

Lindsay Betts: During this call, we will discuss IFRS results and key performance indicators. A detailed description of our key performance indicators is available in our MDNA, which can be found on CDAR.

Lindsay Betts: Neither this call nor the webcast archive may be re-recorded or otherwise reproduced or distributed without prior written permission from NXSAC.

Lindsay Betts: To begin our call, Evan Gabelberg, CEO , will discuss Q4 and 2021 highlights, as well as any recent business developments, followed by Andrew Chan, CFO , who will review our financial results and outlook.

Andrew Chan: Finally, Evan will make closing remarks before opening up the line for a question and answer period. I'll now turn the call over to NextTech AR Solutions CEO and Founder, Evan Gappelberg.

Evan: Thank you, Lindsay. Good evening, everyone. And thank you all for joining us today. First, I want to thank all of our employees who are located across the globe, including Canada, the United States, Europe , Asia, Pacific region for their continued commitment.

Evan: Next Tech's success throughout 2021 and now in 2022 is only made possible through the hard work, creativity, and dedication of our talented and valued employees.

Evan: our culture of organizational learning and working culture that we've developed at the company continues to drive business excellence at Nextech.

Evan: We have emphasized the accelerating adoption and extraordinary demand.

Evan: that we experienced for our augmented reality and metaverse solutions, specifically in Q4. And it really was reinforced with new deals closing in Q4 for augmented reality and e-commerce solutions at a pace that the company has never experienced before. The demand for 3D models

Evan: and augmented reality experiences is increasing globally across a multitude of industries including but not limited to e-commerce, manufacturing, and education. And we believe that this will only accelerate throughout 2022 and beyond. Our company's mission

Evan: is to build the first vertically integrated, AI-powered 3D model factory for the metaverse.

Evan: I'm just going to repeat that, that our mission is to build the first vertically integrated AI-powered 3D model factory for the metaverse. In 2022, we're going to strive to accomplish this ambitious but attainable goal.

Evan: Revenue growth has been quite dramatic since I founded the company back in 2018. We've transitioned to a SaaS business model in Q4 of 2021, which is on full display now as we roll into 2022.

Evan: The ongoing COVID-19 pandemic over the past two years has certainly caused a

Evan: volatility in the market and a lot of unknowns.

Evan: we pivoted to a world of virtual events, and really the whole world pivoted to virtual events and online shopping back in 2020, and even first half of 2021, which resulted in a dramatic boost in revenue for our virtual events and e-commerce businesses in 2020, in the first half of 2021. And as we previously mentioned,

Evan: We have never considered this boost to our virtual events business to be permanent.

Evan: And it really is not the main focus of our company going forward. While we have navigated the pandemic.

Evan: We have always had our eye on the prize, on the bigger picture, which was always, since the founding of the company, augmented reality experiences and the monetization of 3D and AR.

Evan: Over the past four years, we've been investing heavily in our augmented reality and metaverse solutions, making transformative acquisitions and continuing our research and development activities to further enhance our technology stack. Finally, in 2022,

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Evan: really have just begun to reap the rewards of these investments.

Evan: as the world has now woken up to the idea that 3D is the future of e-commerce. The business opportunity and the demand for next tech to produce 3D models and AR experiences for the metaverse has never been greater. In 2021, the pandemic waned, and we saw the opening up of the global economy, which has resulted in a reduction of the necessity for virtual events.

Evan: and has impacted the entire virtual events industry as a whole. We have prepared for this inevitability by cutting our headcount substantially as our virtual events revenue growth leveled off.

Evan: Our live event business is alive and well and growing rapidly. We are a diverse

Yes.

Hello Lee.

Evan: gives us the good fortune to be able to pivot resources.

Joe Smith.

Yes.

Operator.

Hello, Ma'am.

Evan: our resources from virtual events to live events. We have moved some key clients from virtual events to live and hybrid events, which allows us to continue our momentum within the events business on our MAPD platform.

Excuse me Mr. Smith.

I have a little we conduct another call.

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Evan: In 2022, we are seeing a healthy uptick in the live event business with our average monthly MAP Dynamics revenue, which is our live event platform, increasing 78 percent since Q4, with the average MAP Dynamics order increasing 16 percent compared to Q4 of 2021.

Evan: With our 2022 integration of STRIPE, which we previously announced of the MAPD platform, we've seen further growth of high margin revenue.

Evan: The strike integration provided an additional no touch seven hundred and sixty thousand dollars in projected annual revenue for next tech.

Evan: through a 2.3% platform fee when Stripe is used for booth sales, again, for these live events, which is a business segment that we own and operate and are growing currently.

Evan: We expect this high margin revenue to accelerate in 2022 as we introduce a new ticket sales capability which will have at least a 2.3% fee which will take effect in April of 2022 or in the next few weeks. So, we see that business as extremely strong, high margin,

Evan: business that we are just starting to scale currently in 2022. Revenue from our AR solution

Evan: continues to rapidly accelerate. The demand for 3D models for e-commerce has increased as a new, immersive, and engaging way of online shopping has been introduced. Businesses are finally starting to recognize the benefits and consumers are beginning to expect these experiences. In Q3, we announced our expectation to close 2021.

Evan: overall revenue in the 25 to 29 million range. We closed out 2021 with a record-breaking 25.9 million in revenue, representing 40 percent year-over-year growth, which isn't too shabby.

Evan: to ARTIZ3D, which is our flagship product, our flagship product for producing 3D models. And we're signing up these customers for many different industries, including furniture, fashion, streetwear.

Evan: pet wear, jewelry, eyewear, home goods, bespoke gifts, automotive and more. And we're experiencing a big jump in demand for our 3D model making solutions, which we do not see slowing down anytime soon. We are already seeing our enterprise business.

Evan: which we've previously announced that Kohl's is our customer, Kmart is our customer, Pure One's our customers, we're seeing those businesses accelerate their order flow for additional 3D models.

Evan: We are also signing new deals with many small to medium-sized e-commerce sites.

Evan: In Q4 alone, we saw a substantial uptick in customer adoption of our technology that are either signing 12-month annual recurring revenue contracts or annual repeat customers that keep coming back because of our incredible customer service and product technology stack. So, we have almost a million dollars in annual recurring revenue or annual repeat customers.

Evan: If you look at our renewable software license revenue,

Evan: We pegged that at around $1.4 million in 2021, which clearly is the growth engine of the company.

Evan: up 316 percent year over year. This, all of this is

Evan: of our efforts to disrupt the emerging multi-billion dollar 3D model market with the highest quality, lowest cost, most scalable 3D model solution anywhere. All signs

Evan: in 2022 point to being a historic and breakout year for everything 3D. 3D models for e-commerce.

Evan: That's our business as we go forward. That's the area of business that we believe can scale quite quickly and should be what investors keep their eye on to measure the health of the company and our growth potential.

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Evan: Since 2018, we have reported to investors dynamic growth and shown our ability to pivot while delivering on our promise for AR, for e-commerce and review growth, which is now accelerating into 2022. And really all of that.

Evan: We started out with just a kernel of AR in 2018.

Evan: we moved into the e-commerce space into.

Evan: As we move forward in 2020, we added virtual events into the mix and live events.

Evan: Now, in 2022, we are seeing the rapid acceleration in 3D and AR happen.

Evan: And we strongly feel that the growth engine for revenue going forward will be our augmented reality and metaverse solution.

Evan: These solutions are being integrated to become one unified end-to-end suite of solutions.

Evan: called the AR5 Metaverse Suite, which we have previously demoed during an investor presentation and is expected to launch next month in April . We are.

Evan: as a company on the development and release of multiple first-to-market SaaS platforms for augmented reality and the metaverse to capture market share with our entire suite of interconnected products. Just to recap.

Evan: some of the products that have launched and some of the soon to be launched.

Evan: SAS offerings. In Q4 of 2021, we launched ARTIZE Labs for higher ed, ARTIZE Decorator for e-comm, and the Stripe integration all happened in Q4 2021. In Q1 2022, we announced ARTIZE 3D as the public launch, ARTIZE Maps, the app.

Evan: was launched in beta, which is a spatial mapping app that's currently being showcased at MIT.

Evan: We also launched ARTIZE Holograms, our human hologram creator app, which is about to be turned into a web-based human hologram experience, which we think will unleash the true potential of that app.

Evan: ARTIZE 3D, we integrated with Shopify.

Evan: That was a big deal. We're seeing fruits of that integration with many downloads and many customer signups on Shopify. We also have ARTize Swirl and ARTize Social Swirl launched.

Evan: AR-Ti's Metaverse Studio, as mentioned, launching very soon in April . Our CAD to Poly SAS product is expected to launch in Q2. AR-Ti's 3D getting integrated into BigCommerce is expected to launch in March. AR-Ti's 3D WooCommerce integration will be May. AR-Ti's Magento.

Evan: integration may. We are just beginning to see the revenue and business emerge as we move full force into 3D model making.

Operator: Good afternoon, ladies and gentlemen. Welcome everyone to the Nextech Ar Solutions Corporation 2021 fourth quarter and annual results conference call.

Evan: augmented reality, and metaverse solutions with our new SAS operator.

2021 fourth quarter and annual results conference call.

Evan: SAS integration with our product line has significant implications for scalability of our product.

All lines have been placed on mute to prevent any background noise. After the Speakers' remarks, there will be a question and answer session. Instructions will be provided at that time for you to queue up for questions. I'd like to remind everyone that this call is being recorded today Tuesday March 22, 2022.

After the Speakers' remarks, there will be a question and answer session.

Evan: and our revenue growth. With the continued rollout of our SaaS platforms, NextTech continues to move away from a managed solution towards annual recurring revenue. I would say that we have successfully

Instructions will be provided at that time for you to queue up for questions.

I'd like to remind everyone that this call is being recorded today Tuesday March 22.

'twenty two.

I will now turn the call over to Ms. Lindsey Betts, head of Investor Relations at Nextech Ar Solutions Corporation. Please go ahead.

Evan: And as we move forward, we're moving towards a low touch.

Please go ahead.

Evan: business model with monthly recurring revenue and annual recurring revenue. To give our investors an idea of what we're seeing in 2022.

Lindsey Betts: Good afternoon, and welcome to the Nextech Q4 earnings call. With me on the call are Evan Gappelberg, Chief Executive Officer, and Andrew Chan, Chief Financial Officer.

Evan: Our ARR, annual recurring revenue, has increased 57% since the end of the year 2021. Average new 3D deal size is up 53% compared to Q4.

Today, after market close Nextech Air solutions Clark released its financial results for the fourth quarter and year ended December 31, 2021. A copy of the earnings disclosure is available on our website and on SEDAR. Some of the information disclosed on this call is based on information as of today March 22, 2022.

Evan: We're quoting on a whale of the whale of whales, let's call it.

And offers forward looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements.

Evan: It's a quote that we're working on, 39,000 SKUs.

Evan: It could even be bigger than that. It's not a guarantee, but it's a quote, and it's very close. We are contracting with repeat customers. There's an additional

For a discussion of these risks and uncertainties you should review the forward looking statements disclosure in the earnings press release as well as in our SEDAR filings.

Evan: CB2 ordered 2,500 SKUs and we have partnerships with Designer Inc., ShopLine, FKA Brands, and more.

During this call we will discuss IFRF results and key performance indicators.

Our <unk> results and key performance indicators.

A detailed description of our key performance indicators is available in our MD&A, which can be found on SEDAR.

Evan: To date, Next Tech has created over 10,000 3D models with about 70% of those models.

Neither this call nor the webcast archive may be rerecorded or otherwise reproduced or distributed without prior written permission from Nextech.

Evan: created since Q4 2021.

Evan: That's enormous growth in our production of 3D models. In the past nine months.

To begin our call, Evan Gappelberg CEO will discuss Q4 and 2021 highlight as well as any recent business developments. Followed by Andrew Chen CFO, who will review our financial results and outlook. Finally, Evan will make closing remarks before opening up the line for a question and answer period.

Evan: Next X 3D models have had 3.5 million views.

Evan: about 1 million of that 3.5 million has happened in 2022 alone. So about a million views of our 3D models.

I'll now turn the call over to Nextech AR Solutions CEO and founder Evan Gappelberg.

Evan: in 2022 alone in just the first not even three months and we're just getting started.

Thank you Lindsey, good evening everyone and thank you all for joining today. First, I want to thank all of our employees who are located across the globe including in Canada, the United States, Europe, Asia pacific region for their continued commitment.

Today first I want to thank all of our employees who are located across the globe.

Evan: This massive estimated $200 billion 3D model making for the e-commerce business opportunity really just started to emerge.

Including in Canada, the United States Europe Asia.

Pacific region for their continued commitment.

Nextech's success throughout 2021 and now in 2022 is only made possible through the hard work, creativity, and dedication of our talented and valued employees, our culture of organizational learning and working culture.

Evan: in Q4 of 2021 and is continuing in 2022. We believe it's going to continue and we believe we're going to continue to win business because of our strategic

Evan: SaaS and third-party integration initiative with the Shopify's of the world, which will get our ARTIES 3D solution in front of millions of e-commerce merchants globally. And because of our belief that we have the best solution, the lowest cost, highest quality, most scalable solution in the market today. It's only a matter of time in our opinion that our competitors.

That we developed at the company, continues to drive business excellence at Nextech. In 2021, we have emphasized the accelerating adoption and extraordinary demand that we experienced for our augmented reality and net verse solutions specifically in Q4, and it really was reinforced with new deals closing in Q4 for augmented reality and E Commerce solutions at a pace that the company has never experienced before. The demand for 3D models and augmented reality experiences is increasing globally across a multitude of industries, including but not limited to E Commerce, manufacturing, and education and we believe that this will only accelerate throughout 2022 and beyond. Our company's mission is to build the first vertically integrated AI powered 3D model factory for the meta verse.

In Q4, and it really was reinforced with new deals closing in Q4 for augmented reality and E Commerce solutions at a pace that the company has never experienced before the demand for <unk> models.

Evan: will give up, that our competitors will not be able to compete with us, as we believe we have

Evan: the only truly end-to-end solution for the e-commerce industry.

And augmented reality experiences is increasing globally across a multitude of industries, including but not limited to E Commerce manufacturing and education and we believe that this will only accelerate throughout 2022 and beyond our company's Mitch.

Evan: Now, since Facebook rebranded itself as a Metaverse company, it seems like a long time ago, but it really was just a few short months ago, there's been a complete shift towards all things 3D and AR and the Metaverse, and there's really no turning back.

Evan: Zuckerberg came out and said, I believe the metaverse is the next chapter for the Internet. And big tech believes.

Sure.

These two bill the first vertically integrate AI powered <unk> model factory for the meta versus.

Evan: the same thing. Microsoft, Google, NVIDIA, Unity, Shopify, Qualcomm, they're all spending and investing billions, maybe hundreds of billions in the metaverse. Many notable brands have entered the metaverse, including Nike, Adidas, Coca-Cola, Louis Vuitton, Gucci, Disney, McDonald's, and many, many more. This is all great news for NextTech.

I'm just going to repeat that, that our mission is to build the first vertically integrated AI powered 3D model factory for the metaverse. In 2022, we're going to strive to accomplish this ambitious but attainable goal.

First vertically integrated AI powered <unk> model factory for the meta versus in 2022, we're going to strive to accomplish this ambitious but attainable goal rep.

Revenue growth has been quite dramatic since I founded the company back in 2018, we transitioned to a SaaS business model in Q4 of 2021, which is on full display now as we roll into 2022.

It has been quite dramatic since I founded the company back in 2018, we transitioned to a SaaS business model in Q4.

Evan: Big brand involvement and the shift towards mass consumer adoption will only put wind in our sails. We have a unique position as the end-to-end metaverse solution providing spatial mapping, augmented reality.

2021, which is.

Full display now as we roll into 2022.

The ongoing COVID-19 pandemic over the past two years has certainly caused a lot of volatility in the market and a lot of unknowns.

Evan: Ultimately, you add that together, you get the trisecta.

<unk> has certainly caused a lot of.

Volatility in the market and a lot of unknowns.

Evan: We've created a platform like no other.

We pivoted to a world of virtual events and really the whole world pivoted to virtual events and online shopping back in 2020 and even first half of 2021. Which resulted in a dramatic boost in revenue for our virtual events and ecommerce businesses in 2020 and the first half of 2021. And as we previously mentioned, we have never considered this boost to our virtual events business to be permanent and it really is not the main focus of our company going forward. While we have navigated the pandemic, we have always had an eye on the prize on the bigger picture, which was always since the founding of the company augmented reality experiences and the monetization.

Evan: that allow for immersive experiences, ease of...

Evan: All this is now on display at MIT.

Evan: tomorrow for the hackathon which we publicly announced today. Our position will be.

in a dramatic boost in revenue for our virtual events and ecommerce businesses in 2020 in the first half of 2021 and as we previously mentioned, we have never considered this boost to our virtual events business to be permanent.

Evan: on the release of our AR-Type Metaverse suite, which is coming up in a couple of weeks.

Evan: As mentioned, the ARTI suite of SAS products

and it really is not the main focus of our company going forward. While we have navigated the pandemic, we have always had a high.

Evan: allows you to sign in and essentially choose your SAF solution, whether you want a 3D model solution, an exploded view, whether you want our showroom, hotspots, animation, swirl ads, our configurator. It's all there in one place.

on the prize on the bigger picture, which was always since the founding of the company augmented reality experiences and the monetization.

Evan: it will become the 3D destination for businesses.

Of 3D and AR solutions. Over the past four years, we've been investing heavily in our augmented reality and metaverse solutions, making transformative acquisitions and continuing our research and development activities to further enhance our technology stock.

And our augmented reality and better versus solutions, making transformative acquisitions and continuing our research and development activities to further enhance our technology stock.

Evan: Malls, sports stadiums, retail stores, university campuses, theme parks, museums, corporate headquarters, events, live events, restaurants, rental properties.

Finally in 2022, we have just begun to reap the rewards of these investments as the world has now woken up to the idea that 3D is the future of e-commerce. The business opportunity and the demand for Nextech to produce 3D models and AR experiences for the metaverse has never been greater. In 2021, the pandemic wane and we saw the opening up of the global economy, which has resulted in a reduction of the necessity for virtual events and has impacted the entire virtually events industry as a whole.

We have just begun to reap the rewards of these investments as the world has now woken up to the idea that 3D is the future of e-commerce. The business opportunity and the demand for Nextech to produce 3D models and they are experiences for the med <unk>.

Evan: place of business, or even your home into a metaverse. It's all there. Considering the potential applications for what Nectech.

Evan: We believe that there's over $250 billion up for grabs.

has never been greater. In 2021, the pandemic wane and we saw the opening up of the global economy, which has resulted in a reduction of the necessity for virtual events and has impacted the entire virtually events industry as a whole.

Evan: We believe that the SAS for e-commerce alone as just a segment.

Evan: of the entire 250 billion metaverse addressable universe is over a hundred billion dollars. So it's

We have prepared for this inevitability by cutting our head count substantially as our virtual events revenue growth leveled off.

Evan: And we believe that we have a leadership position and an opportunity to take huge market share over the coming years. I want to change gears.

Revenue growth leveled off.

However, our live event business is alive and well and growing rapidly. We are a diversified company, which gives us the good fortune to be able to pivot resources.

Our live event business.

Evan: I want to speak to our investors for one moment about NASDAQ and our

is alive and well and growing rapidly. We are a diversified company, which gives us the good fortune to be able to pivot resources.

Evan: Everybody should know by now that we have applied to NASDAQ and

And we have moved our resources from virtual events to live events. We have moved some key clients from virtual events to live and hybrid events, which allows us to continue our momentum within the events business on our map the platform.

Evan: We still are looking at this as a top priority.

Evan: We appreciate all of your patience while we work towards this goal, and we strongly feel that we are better prepared than ever to achieve it.

Evan: Case in point, during Q3 of 2021, we announced our change of auditor to Markham.

In 2022, we are seeing a healthy uptick in the live event business with our average monthly map dynamics revenue, which is our live event platform, increasing 78% since Q4 with the average Map Dynamics order decreasing 16% compared to Q4 of 2021.

Evan: Markham is an extremely well-known, reputable U.S. audit firm that has hundreds of companies that they've taken.

Evan: to an uplisting on NASDAQ or NYSE. We have also hired.

Decreasing 16% compared to Q4 of 2021.

Evan: top new legal counsel at Hanes and Boone, who have a track record of success in getting companies uplisted.

Also, with our 2022 integration of strike, which we previously announced of the Map D platform, we've seen further growth of high margin revenue with these events. The Strike integration provided an additional no touch $760,000 in projected annual revenue for Nextech.

With our 2022 integration of strike, which we previewed we announced of.

Evan: We are currently working with Markham and Haynes and Boone and are confident in their extensive experience in the U.S. exchange uplisting of companies that are like Next Tech. I cannot specify.

The map the platform, we've seen further growth of high margin revenue.

With these events the strike integration provided an additional no touch 700.

Evan: I cannot reiterate enough that this is a priority for us and we are taking all the necessary steps.

And $60000 in projected annual revenue for next tech.

Through a 2.3% platform fee when stripe is used for boot sales, again for these live events, which is a business segment that we own and operate and are growing currently.

Evan: while observing and complying with U.S. exchange and SEC regulations in preparation of entry on to.

Evan: a U.S. major exchange.

Evan: Q4 was an important quarter for growth in 2021.

Currently.

We expect this high margin revenue to accelerate in 2022, as we introduce a new ticket sales capability, which will have at least the 2.3%.

Evan: as a whole should be viewed as a transformative year for NextTech.

Evan: We officially became a metaverse company with two transformative acquisitions and we succeeded.

<unk>.

Which will take effect in April of 2022 or in the next few weeks, so we see that business as extremely strong high margin, profitable

Evan: which was not easy in moving our business model from.

As extremely strong.

High margin.

Evan: to an ARR slash month of recurring revenue formula.

<unk>.

business that we are just starting to scale currently in 2022. Revenue from our AR solutions continues to rapidly accelerate the demand for 3D models for E. Commerce has increased as a new immersive and engaging way of online shopping has been introduced.

Evan: Next tech is now fully focused on obtaining greater industry leadership in the augmented reality and the metaverse space with our entire suite of interconnected products in 2021 augmented reality.

Businesses are finally starting to recognize the benefits and consumers are beginning to expect these experiences. In Q3, we announced our expectation to close 2021 with all oral revenue and the $25 to $29 million range, we closed out 2021 with a record breaking $25.9 million in revenue, representing 40% year over year growth.

Evan: These solutions have changed from a nice to have to a must have in 2022. And this is really what we've been preparing for since the founding of the company in 2018. I'm more confident than ever in the accelerating momentum of our augmented reality and metaverse solutions. And I expect 2022 to be a year of hyper growth for all things augmented reality and the metaverse.

With all oral revenue and the $25 to $29 million range, we closed out 2021 with a record breaking $25.9 million in revenue, representing 40% year over year growth.

Evan: there has been a digital transformation. And once you go 3D, you do not go back to 2D. Our AR products are

Which isn't too shabby. We are now signing up new accounts to AR 3D, which is our flagship product for producing 3D models.

We are now signing up new accounts to AR 3D, which is our flagship product.

Evan: and has significant implications for monthly recurring revenue and annual recurring revenue, which will accelerate with the adoption and stickiness of our entire augmented reality products and suites, which again is launching in April .

Product for producing <unk> models.

We're signing up these customers for many different industries, including furniture, fashion, sporting equipment, tech ware, jewelry, eyewear, homegoods, automotive and more. And we're experiencing a big jump in demand for our 3D model, making solutions, which we do not see slowing down anytime soon.

Fashion.

Ordering equipment.

<unk> jewelry eyewear homegoods.

Evan: Fueled by the metaverse, the augmented reality tidal wave is finally here.

Gifts automotive and more and we're experiencing a big jump in demand for our <unk> model, making solutions, which we do not see slowing down anytime soon.

Evan: I've been repeatedly saying over the past four years, many of you have heard this.

We are already seeing our enterprise business.

Evan: that this will be a multi-decade, multi-billion dollar megatrend.

Which we previously announced that Kohl's is our customer, Kmart is our customer, Pier One's our customer. We're seeing those businesses accelerate their order flow for additional 3D models.

Evan: Big Tech is now committed to building the ecosystem that NEC Tech thrives in and we feel confident. We feel very confident that our goal will be achieved. We are just at the beginning.

We are also signing new deals with many small to medium sized E. Commerce sites, in Q4 alone we saw a substantial uptick in customer adoption of our technology that are either signing 12 month annual recurring revenue contracts or annual repeat customers.

Or either signing 12 month.

annual recurring revenue contracts or annual repeat customers.

Evan: Today, I have the utmost belief in our company's direction, our executive team, and in everybody behind the scenes working to achieve our vision of building the first.

That keep coming back because of our incredible customer service and product technology stack. So, we have almost $1 million in annual recurring revenue or annual repeat customers.

Evan: vertically integrated AI powered 3D model factory for the metaverse. With a successful 2021 now behind us, I believe that 2022 will go down in history as the breakout year for everything 3D and a great year for growth.

If you look at our renewable software license revenue.

We pegged that at around 1.4 million in 2021 , which clearly is the growth engine of the company up 316% year over year. This, all of this, is truly a validation of our efforts to disrupt the emerging multibillion dollar 3D model market with the highest quality, lowest cost, most scalable 3D model solution anywhere. All signs in 2022 point to be a historic and breakout year for everything 3D.

Speaker Change: for Nextech and our shareholders. With that, I'm gonna turn the call over to Nextech Air Solutions CFO .

Up 316% year over year. This all of this.

Speaker Change: Andrew Chan, who will provide commentary on the quarterly results. Andrew, take it away.

It's truly a validation.

Of our efforts to disrupt the emerging multibillion dollars three D model market with the highest quality lowest cost most scalable <unk> model solution anywhere all signs.

Andrew Chan: Thank you, Evan, and good evening, everybody. As a reminder, unless otherwise noted, all figures reported on today's call are on Canadian dollars under IFRS.

In 2022 point to be.

Andrew Chan: All the preceding information is now available on our website. It has been filed on CDAR at the close of market today for your reference.

Our historic and breakout year for everything <unk> <unk>.

3D models for E-Commerce.

Andrew Chan: Total revenues in the quarter was $6.4 million, up 11% from $5.7 million in Q3 2021, and down 9% compared to Q4 2020.

Annual recurring revenue.

That's our business as we go forward. That's the area of business that we believe can scale quite quickly and should be what investors keep their eye on to measure the health of the company and our growth potential.

Quickly and should be what investors keep their eye on to measure the health of the company and our growth potential.

Andrew Chan: Annual revenues were $25.9 million, up 47% from fiscal 2020. Compared to last year, product sales increased 30%, technology services increased 55%, and renewable software revenues increased 316%.

Since 2018, we reported to investors dynamic growth.

And shown our ability to pivot while delivering on our promise for AR, for E Commerce, and revenue growth, which is now accelerating into 2022 and really all of that speaks for itself. We started out with just the kernel of AR in 2018.

Andrew Chan: Q4 2021 product sales were $4.2 million, down 8% over Q4 2020 and Q3 2021.

All of that speaks.

For itself, we started out with just the kernel of <unk> in.

Andrew Chan: Although product sales increased 38% year over year, the decline this quarter was mainly due to the impact of COVID-19 on the supply chain and getting the desired inventory products for the retail busy season.

2018.

We moved into the E-Commerce space in 2019.

In 2019.

As we move forward in 2020, we added virtual events into the mix and live events.

Andrew Chan: Our Q4 2021 technology services was 1.6 million, down 26% from Q4 2020 at the height of the demand for virtual events. However, up 55% compared to Q3 2021.

Now in 2022, we are seeing the rapid acceleration in 3D and AR happening and we strongly feel that the growth engine for revenue going forward will be our Augmented Reality and Metaverse solutions. These solutions are being integrated to become one unified [inaudible] suite of solutions.

Andrew Chan: Towards the second half of 2021, we have focused our sales and marketing efforts to promote our AR products and subscription based businesses and thus on virtual events. However, we still saw consistent demand in 2021 with a 55% increase in technology services revenue year over year.

Suite of solutions.

<unk>.

Andrew Chan: Renewable software revenue was the fastest growing part of our segment.

Called the AR Archives Metaverse suite, which we have previously demo'd during an investor presentation and is expected to launch next month in April.

Andrew Chan: with half a million of dollars in revenue in Q4 2021, up 125% from Q3 2021.

Andrew Chan: and makes up 5% of our total revenues at $1.4 million for 2021 with a growth of 316% from last year.

Our focus.

We are focused as a company on the development and release of multiple first to market SaaS platforms for Augmented Reality and the Metaverse to capture market share with our entire suite of interconnected products. Just to recap, some of the products that have launched and some of the soon to be launched SaaS offerings. In Q4 of 2021, we launched ARitize labs for higher Ed AR ties decorator, for E-Com, and the Striped integration. All happened in Q4 2021.

Andrew Chan: At December 31st, 2021, this segment accumulated $475,000 of annual recurring revenue ARR, mainly from fourth quarter sales.

Some of the products that have launched and some of the soon to be launched SaaS offerings. In Q4 of 2021, we launched <unk> labs for higher Ed AAR ties decorator.

Andrew Chan: Gross profit during Q4 2021 increased by 24% compared to Q3 2021, however, was still down 28% compared to Q4 2020. Overall, for the year, gross profit was the same in 2021 compared to 2020 at 9.8 million.

And the striped integration.

All happened in Q4 2021.

Q1, 2022, we announced ARitize 3D as the public launch ARitize maps, the app. It was launched in beta which is a spatial mapping app that's currently being showcased at MIT.

Andrew Chan: Product sales gross profits were negatively affected as a result of the global supply chain issues in the second half of 2021. That resulted in higher inventory and shipping prices for the same product.

As the public launch advertise maps the app.

It was launched in beta which is a spatial mapping app. That's currently being showcased at <unk>.

Andrew Chan: We saw improved gross margins in our technology services business compared to Q3, as more virtual events in Q4 helped reduce the effects of the fixed cost nature of our virtual events delivery team.

We also launched ARitize holograms our human hologram creator app, which is about to be turned into a web based human hologram experience, which we think will unleash the true potential of that app.

Our ties hollow grants are human hologram creator App, which is about to be turned into a web based human hologram experience, which we think will unleash the true potential of that app.

Andrew Chan: Going forward, we have reduced these fixed costs to better align with our forecasted demand. As we ramp up our AR and Metaverse businesses through 2022,

ARitize 3D. We integrated with Shopify, that was a big deal. We're seeing fruits of that integration with many downloads and many customers sign-ups on Shopify. We also have ARitize Swirl and ARitize Social Swirl launched in Q1.

Andrew Chan: And as they contribute more significantly to our bottom line, we anticipate further increases in gross profits as margins for that segment is much higher than the product sales and virtual events business.

We integrated with Shopify. That was a big deal, we're seeing fruits of that integration with

That was a big deal, we're seeing fruits of that integration with.

Andrew Chan: Operating expenses for Q4 were $8.5 million, compared to $10 million in Q3 2021, a savings of $1.5 million.

Many downloads and many customers sign ups on Shopify, we also have airtight swirl of <unk>, social swirl launched in.

Andrew Chan: The decrease in operating expenses in the quarter was mainly due to lower expenses in sales and marketing and research and development.

In Q1.

ARitize Metaverse Studio as mentioned launching very soon in April. Our cads of poly SaaS Prowler is expected

Andrew Chan: During the past couple of quarters, we've restructured our sales force and marketing spend to a more cost effective model for the new pursuits in AR sales.

As expected.

To launch in Q2, ARitize 3D getting integrated into Big Commerce is expected to launch in March. ARitize 3D will commerce integration will be May. ARitize Magento integration May.

Andrew Chan: with the intention of lowering overall sales cost as a percentage of revenue over the upcoming quarters, in addition to managing our product sales expectations as a result of COVID-19 supply chain issues.

Andrew Chan: The decrease in development cost was a result of shifting our development focus to AR products, resulting in overall lower headcount in this area.

We are just beginning to see the revenue and business emerge as we move full force into 3D model making.

Andrew Chan: General and administrative costs remain consistent. However, we do anticipate lower expenses in this category going forward with ongoing cost-cutting initiatives since the new year.

Augmented Reality and Metaverse solutions with our new SaaS offerings. SaaS integration with our product line has significant implications for scalability of our products and our revenue growth. With the continued rollout of our SaaS platforms, Nextech continues to move away from a managed solution towards annual recurring revenue I would say that we have successfully accomplished that goal.

Andrew Chan: Overall headcount is currently approximately 140 people down close to 50 percent from the peak in the summer of 2021.

And our revenue growth with the continued rollout of our SaaS platforms next tech continues to move away from.

Andrew Chan: We had a net loss in Q4 of $9.3 million compared to a loss of $8.2 million in Q3 due to non-cash stock-based compensation in Q4. However, once removed, net loss for Q4 would be around $7.3 million, a decrease of close to $1 million in loss.

a managed solution towards annual recurring revenue I would say that we have.

Excess fully.

accomplished that goal.

And as we move forward, we're moving towards a low touch/no touch business model with monthly recurring revenue and annual recurring revenue to give our investors an idea of what we're seeing in 2022 so far.

Andrew Chan: As of December 31st, 2021, we had cash of 7.2M, inventory of 3.4M, and a positive working capital of 9.2M. With the addition of the 10M raised in January of 2020, we have close to 20M of working capital to start the year in 2022, along with the results of our aggressive cost savings plan to reduce the cash burn to 1M a month. We will not need access to capital for the next 12 months.

/no touch business model with monthly recurring revenue and annual recurring revenue to give.

Our investors an idea.

Of what we've seen in 2022, so far.

Our.

Our ARR annual recurring revenue has increased 57% since the end of the year 2021. Average new 3D deal size is up 53% compared to Q4.

Andrew Chan: I would like to personally thank my finance and accounting team, along with our internal business partners for all their hard work and making this happen over the last few months with that I turn.

We're quoting on a whale.

The Wale of Wales, let's call it.

Speaker Change: Thank you, Andrew. In closing, I would like to thank our employees, our shareholders, of course, and our partners for the continued support as we remain focused on preserving and growing long-term value for our shareholders. On behalf of Next Tech, thank you for your support as always and thank you for taking the time to join us on this call. Operators, we are now ready for the exciting question and answer session.

<unk>.

It's a quote that we're working on. 39,000 skus.

It could even be bigger than that, it is not a guarantee, but It's a quote and its very close. We are contracting with repeat customers.

It's a quote and its very close we are contracting with repeat customers.

There's an additional 3,000 SKU order [inaudible] ordered 2500 Skus.

We have partnerships with Designer, Inc., ShopLine, FKA brands, and more.

To date Nextech has created over 10,000 3D models with about 70% of those models created since Q4 2021.

Speaker Change: That is noted sir. If you would like to ask a question at this time, please press star then the number 1 on your telephone keypad.

Speaker Change: If you would like to withdraw your question, press the pound key.

That's enormous growth in our production of 3D models. In the past nine months Nextech's 3D models have had 3.5. million views. About 1 million of that3.5 million has happened in 2022 alone. So, about a million views of our 3D models in 2022 alone in just the first not even three months.

Speaker Change: Our first question comes from the line of Scott Buck from HC Wainwright. Your line is open.

Nextech's 3D models have had 3.5. million views. About 1 million of the 3.5 million has happened in 2022 alone. So, about a million views of our 3D models.

Scott Buck: Hi. Good afternoon, guys. I appreciate the time for a follow-up and a lot of really good information on the call, Evan. Really appreciate it. First question for me.

million views. About 1 million of the $3.5 million has happened in 2022 alone. So, about a million views of our 3D models.

Scott Buck: I'm curious, can you talk to us a little bit about, you know, what the other 3D modeling model offers are on some of the e-commerce platforms and how, you know, your product differs from theirs and maybe what would, you know, direct somebody using that platform towards, you know, a Next Tech product versus a competitor?

1022 alone in just the first.

Not even three months.

And we're just getting started.

This massive estimated $200 billion 3D model making for the E-Commerce business opportunity really just started to emerge in Q4 of 2021 and is continuing in 2022. We believe it's going to continue and we believe we're going to continue to win business because of our strategic SaaS and third party integration

business opportunity really just started to emerge in Q4 of 2021 and is continuing in 2022. We believe it's going to continue and we believe we're going to continue to win business because of our strategic SaaS and third party integration

Speaker Change: Sure, so it's a broad question. There's a lot of differences between Next Tech and other 3D modeling companies. To summarize, I would say, as we've spoken, our business model is very different where our competitors essentially sell a 3D model. So, you know, a 3D model, let's just say Boston.

initiative with the Shopify's of the world, which will get our ARitize 3D solution in front of millions of e-commerce merchants globally. And because of our belief that we have the best solution, the lowest cost, highest quality, most scalable solution in the market today.

Speaker Change: $50 to make and you know our competitors will sell that for a hundred or a hundred and fifty dollars That's the standard business model in the industry next tech has taken a completely different tack

It's only a matter of time in our opinion, that our competitors will give up. That our competitors will not be able to compete with us as we believe we have the only, truly end to end solution for the E-Commerce industry.

Speaker Change: and have aligned ourselves with e-com merchants by turning our offering into a monthly subscription, a SaaS product. So don't pay us for the whole 3D model cost up front.

end to end solution for the E-Commerce industry.

Now, since Facebook rebranded itself as a Metaverse company. It seems like a long time ago, but it really was just a few short months ago. There's been a complete shift towards all things 3D and AR and the Metaverse and there's really no turning back.

Speaker Change: pay us over the course of 12 months. And by doing that, we're essentially partnering with these sites so that, you know, instead of paying, let's say $150, in the example I just gave, for a 3D model, pay us $250 per month and we'll supply you with 25 3D models, but you're signing.

As everybody knows, Zuckerberg came out and said "I believe the Metaverse is the next chapter for the internet".

Zuckerberg came out and said "I believe the Metaverse is the next chapter for the internet".

And Big Tech believes the same thing. Microsoft, Google [inaudible], Unity, Shopify, Qualcomm.

Speaker Change: So for Nextech, we get our ROI in like month four, month three or four essentially is when we break even and after that we start essentially printing money. The other piece of it, Scott, is

They're all spending and investing billions maybe hundreds of billions in the Metaverse. Many notable brands have entered the Metaverse including Nike, Adidas, Coca Cola, Louie Vutton, Gucci, Disney, Mcdonalds, and many many more.

Speaker Change: We look to our additional, let's just call them add-on.

This is all great news for Nextech.

Speaker Change: features, the configurator has become a runaway Grand Slam for us where you create one 3D model and using the configurator, you're able to essentially change the colors of the 3D model and or the design or the fabric if it's a couch just by pressing a button. So if you have, let's say, a hundred different configurations of a single model, by paying us $500 a month, you get...

Big Tex commitment.

Big brand involvement and the shift towards mass consumer adoption will only put wind in our sails.

We have a unique position as the end to end Metaverse solution, providing spatial mapping Augmented Reality and 3D models.

Augmented Reality and 3D models.

Three D models.

Ultimately, you add that together you get the trifecta.

By sector.

We've created a platform like no other that allow for immersive experiences, ease of use and low cost.

Speaker Change: plus the configurator, and now you have a full on.

That allow for immersive experiences.

Speaker Change: solution for that product. And, you know, it kind of just keeps going from there, Scott, where we also have hotspots.

, ease of use and low cost.

And low cost.

All of this is now on display at MIT tomorrow for the hackathon, which we publicly announced today.

Speaker Change: We have a decorator showroom. We have the ability to offer animations. We have a proprietary banner ad for swirl ads. And it's all.

Tomorrow for the hackathon, which we publicly announced today.

Our position will be cemented further upon the release of our ARitize Metaverse Suite, which is coming up in a couple of weeks.

Speaker Change: It all leads back to our AR-sized metaverse suite, where you log in and you get to essentially have a full spectrum of 3D product offerings for your e-commerce site. And our competitors just don't have that kind of breadth of product, and they certainly don't offer the monthly benefits.

As mentioned, the ARitize Suite of SaaS products allows you to sign in and essentially choose your SaaS solution, whether you want a 3D model solution in exploded view, whether you want our showroom, Hotspots, Animation, Swirl ads, our configurator, it's all there in one place.

your SaaS solution, whether you want a 3D model solution in exploded view, whether you want our showroom, Hotspots, Animation, Swirl ads, our configurator, it's all there in one place.

Speaker Change: revenue, the monthly payment terms that we offer.

It will become the 3D destination for businesses.

Speaker Change: That's very helpful, Evan. Do you know off the top of your head or have some idea, you know, how many customers that purchase models then, you know, come back 30, 60 days later and request some of these other, you know, services off the menu?

There's endless use cases.

Malls, sports stadiums, retail stores, university campuses, theme parks, museums, corporate headquarters, events, live events, restaurants, rental properties. Anybody that wants to turn their place of business or even your home into a Metaverse. It's all there.

Events, live events, restaurants.

Evan: It's about 50% of the customers that try a 3D model and then, you know, try a simple kind of 3D model and then they come back.

Restaurants rental properties anybody that wants to turn their play.

business or even your home into a Metaverse. It's all there.

Evan: for additional services. What we're also noticing is that we do a lot of POCs, proof of concepts, you know, where people are like, oh, you know, let's try it out. After people try it out, we get 80% of those people converting into customers. So those are very bullish signs for our industry.

Considering the potential applications, for what Nextech has built and anticipated market adoption.

For what net tech has built.

And anticipated market adoption.

We believe that there is over $250 billion up for grabs.

We believe that the SaaS for E Commerce alone as just a segment of the entire 250 billion Metaverse addressable universe is over $100 billion.

The SaaS for E Commerce alone.

Just the segment.

of the entire 250 billion Metaverse addressable universe is over $100 billion.

Speaker Change: Great, that's helpful. You mentioned some, you know, rather large enterprise opportunities that you guys are working on. Do you have the capacity to be able to fulfill all those requests or would that require, you know, additional?

So it's not a small number and we believe that we have a leadership position. And an opportunity to take huge market share over the coming years. I wanted to change gears.

And we believe that we have a leadership position.

An opportunity to take huge market share over the coming years I wanted to change gears.

Speaker Change: software engineers, developers, anything along those lines that would, you know, dramatically impact the OpEx line.

I want to speak to our investors for one moment about NASDAQ and our uplifting goal.

And our investors for one moment.

Speaker Change: Yeah, so that's a good question. We are a factory, so we are scaling up.

About Nasdaq and our uplifting goal.

Everybody should know by now that we have applied to NASDAQ and we still are looking at this as the top priority.

Speaker Change: as the demand comes in. It does require us to build some new tech. We are continuing to build better and better technology.

We appreciate all of your patience while we work towards this goal and we strongly feel that we are better prepared than ever to achieve it.

All of your patience, while we work towards this goal and.

Speaker Change: that continues to allow us to have a competitive advantage in the market.

And we strongly feel that we are better prepared than ever to achieve it.

Speaker Change: So I would say that we're building it while we're flying it, or we're flying it while we're building it. Maybe better summarizes it where we've delivered.

Case in point during Q3 of 2021, we announced our change of auditor to MarCom.

Mark.

MarCom is an extremely well known reputable U.S audit firm that has hundreds of companies that they've taken to uplifting on NASDAQ or NYSE.

Speaker Change: For one customer, 2,500 models in a month.

Speaker Change: That was a heavy lift, but we did it. We're now beyond that, and we're gonna continue to scale, and the goal is to be able to do significant volumes as we move into the second half of the year, as we get more automation, more AI, more machine learning under our factory umbrella.

And up listing on NASDAQ or NYSE.

We have also hired top new legal counsel at Haynes in Boone, who have a track record of success in getting companies uplifted.

Top new legal counsel at Haynes in Boone, who have a track record of success.

Getting companies uplifted we occur.

We are currently working with MarCom and Hanes in Boone and are confident in their extensive experience in the U.S exchange uplift themes of companies that are like Nextech.

I cannot specify timing around this.

Speaker Change: All right, that makes sense. And last one for me, a nice sequential tick higher on gross margin. How should, as the business makes shifts, how should we be thinking about gross margins and what's the, you know, what's the ceiling?

I cannot reiterate enough that this is a priority for us and we are taking all the necessary steps, while observing and complying with U.S exchange and SEC regulation and preparation of entry onto. a U.S major exchange.

Speaker Change: Well, I'm going to let Andrew take half of this, but in general terms, the business is shifting away from managed services, away from e-commerce.

a U.S major exchange. in closing.

In closing, Q4 was an important quarter for growth in 2021 as a whole should be viewed as a transformative year for Nextech.

As a whole should be viewed as a transformative year for next tech.

Speaker Change: Well, the e-commerce business is kind of there, but it's, you know, kind of on autopilot.

We officially became a Metaverse company with two transformative acquisitions and we succeeded.

Speaker Change: We don't spend a lot of time on it and a lot of resources, but when you look at the business that's growing, which is

We succeeded.

Which was not easy in moving our business model from a managed service to an ARR/monthly recurring revenue formula.

In moving our business model.

Speaker Change: software, it's growing very rapidly, and it has a much, much higher margin. So, over time, the margin is going to get better and better and better. But I'll let Andrew maybe dig into a little more detail. Yes.

From a managed service to.

AAR or slash monthly recurring revenue formula.

Nextech is now fully focused on obtaining greater industry leadership in the Augmented Reality in the Metaverse space with our entire suite of interconnected products.

Andrew Chan: You know, if you look at the margins for our product sales, I mean, they hover around, you know, the high 38% to kind of the low 42%. That's kind of where we.

In 2021 Augmented Reality in the Metaverse took center stage.

These solutions have changed from a nice to have to a must have in 2022.

Andrew Chan: see that spot with the capacity that we have or the volume that we have at this point. You know, with COVID-19 and the supply chain issues, that has kind of taken it from kind of 40 something percent to kind of high 38, 39 in Q4 and I believe in Q3 as well. The managed services business, you know, that was quite labor intensive as I had indicated through delivery and whatnot.

And this is really what we've been preparing for since the founding of the company in 2018.

I'm more confident than ever in the accelerating momentum of our Augmented Reality and Metaverse solutions and I expect 2022 to be a year of hyper growth for all things Augmented Reality and the Metaverse. There has been a digital transformation and once you go 3D, you do not go back to 2D.

Andrew Chan: And so, as that kind of levels off or, you know,

back to 2D.

Andrew Chan: declined a little as we see the demand. The positive contribution to what Evan was saying about 3D models and the model factory is, I would say, close to 50 to 70% in terms of margin. So, as we see more volume there, I can only imagine our gross profit to increase.

Our AR products are sticky and has significant implications for our monthly recurring revenue and annual recurring revenue, which will accelerate with the adoption and stickiness of our tire Augmented Reality products and Suites, which again is launching in April .

Yield by the Metaverse, the Augmented Reality tidal wave is finally here.

I've been repeatedly saying over the past four years. Many of you have heard this, that this will be a multi decade, multi billion dollar megatrend.

Speaker Change: Okay, that's perfect. I appreciate it, Andrew. Thanks again, everyone, for the time for questions.

that this will be a multi decade, multi billion dollar megatrend.

Speaker Change: Our next question comes from the line of Lisa Thompson from SAC Investments. Your line is open.

Billion dollar megatrend.

Big Tech is now committed to building the ecosystem that Nextech thrives in and we feel confident.

And we feel confident.

We feel very confident that our goal will be achieved.

Lisa Thompson: So it looks like you got e-commerce back to break even, right? Is that where... and then that's where it's going to stay? Is that the idea?

That's.

Our goal.

We will be achieved.

We are just at the beginning.

Speaker Change: Yeah, I mean, the e-com business, like I said, is kind of on autopilot at this point, Lisa.

It's an exciting time.

Could be a public company and to be an investor in this space.

And to be an investor in this space with.

The future is bright for Nextech AR.

Lisa Thompson: So could you talk, when you talk about putting a bid out for a whale, talk about who is, who literally are the companies you're bidding against so that we can keep an

Today I have the utmost belief in our company's direction, our executive team, and everybody behind the scenes working to achieve our vision of building the first vertically integrated AI powered 3D model factory for the Metaverse. With a successful 2021 now behind us, I believe that 2022 will go down in history as the breakout year for everything 3D and a great year for growth for Nextech and our shareholders. With that I'm going to turn the call over to Nextech AR solutions CFO .

Lisa Thompson: So, these are RFP.

integrated AI powered 3D model factory for the Metaverse. With a successful 2021 now behind us, I believe that 2022 will go down in history as the breakout year for everything 3D and a great year for growth for Nextech and our shareholders. With that I'm going to turn the call over to Nextech AR solutions CFO .

Lisa Thompson: which means, you know, it's kind of a closed loop. You don't really know who you're quote bidding against.

Lisa Thompson: What I would say is that it's a very, very small group, very small.

For next tech and our shareholders with that I'm going to turn the call over to next Tech Air solutions CFO .

Lisa Thompson: It's just, you know, there's only a few companies at the table that are capable.

Andrew Chang, who will provide commentary on the quarterly results. Andrew take it away.

Lisa Thompson: And I would say that on these on these whales, they put you through, you know, different levels of testing our abilities, because these are sophisticated.

On the quarterly results Andrew take it away.

Thank you, Evan and good evening everybody. As a reminder, unless otherwise noted, all figures reported on today's call are in Canadian dollars under [inaudible].

Lisa Thompson: You know, some of these companies are trillion-dollar public companies. Some of them are, you know, just hundreds of billions, but they're huge. And so, they're sophisticated. And so, what I can say, Lisa, is that they have put us through testing, and we've passed the quality test.

All of the preceding information is now available on our website and has been filed on SEDAR at the close of market today for your reference.

Total revenues in the quarter was $6.4 million up 11% from $5.7 million in Q3, 2021 and down 9% compared to Q4 2020.

Annual revenues were $25.9 million up 47% from fiscal 2020. Compared to last year product sales increased 38% technology services increased 55% and renewable software revenues increased 316%.

Lisa Thompson: meaning, you know, they give you X number of models, and they ask you to produce them. And they're highly complex. These are not, you know, simple. And so, we have passed that test.

Compared to last year product sales increased 38% technology services increased 55% Andrew.

And renewable software revenues increased 316%.

Lisa Thompson: So who do you run up against in general? When customers come to you, they say, oh, we tried X, Y, Z, and now we're going to try you? Is there only a few people? Yeah.

Q4 2021 product sales were $4.2 million down 8% over Q4 2020 in Q3 2021.

Although product sales increased 38% year over year, the decline this quarter was mainly due to the impact of COVID-19 on the supply chain and getting the desired inventory products for the retail busy season.

Lisa Thompson: There's really only two companies that we hear about.

products for the

Lisa Thompson: And I would say that, you know, we're hearing less and less about them, and I'll explain why.

Retail busy season.

Our Q4 2021 technology services was $1.6 million down 26% from Q4 2020 at the height of the demand for virtual events, however, up 55% compared to Q3 2021.

Lisa Thompson: One is a company called 3KIT that has a configurator and they do photorealistic 3D models. They raised $35 million, I think, at a series B late last year. Another company's called MarkScent, which has been around for a while. And both of those companies, if you go and you look them up and you do your research, are very, very heavily geared, if not exclusively geared, towards making...

Towards the second half of 2021, we have focused our sales and marketing efforts to promote our AR products and subscription based businesses and less on virtual events. However, we still thoughts consistent demand in 2021 with a 55% increase in technology services revenue year over year.

Renewable software revenue was the fastest growing part of our segment with half a million dollars in revenue in Q4, 2021 up 125% from Q3 2021.

Lisa Thompson: to meeting models or providing solutions for the furniture industry. They do not venture outside of that.

That makes up 5% of our total revenues at $1.4 million for 2021 with a growth of 316% from last year.

Lisa Thompson: is that we are actually providing 3D models, not just for the furniture industry, but for the sports industry, you know, sporting goods, for clothing, for

At December 31, 2021 this segment accumulated 475,000 of annual recurring revenue ARR mainly from fourth quarter sales.

from fourth quarter sales.

Gross profit during Q4 2021 increased by 24% compared to Q3 2021. However, was still down 28% compared to Q4 2020.

Lisa Thompson: And, you know, there really isn't anybody that we run up against in those markets.

Overall for the year gross profit was the same in 2021 compared to 2020 at $9.8 million.

Lisa Thompson: those markets to ourselves, as crazy as that sounds.

Lisa Thompson: There's nobody else that we run up against in those markets.

Product sales gross profits were negatively affected as the result of the global supply chain issues in the second half of 2021.

as the result of the global supply chain issues in the second half of 2021.

Lisa Thompson: So, when I look at what you're doing now, it seems like you're actually getting involved in building the model and it looks to me a lot like.

That resulted in higher inventory and shipping prices for the same products.

We saw improved gross margins in our technology services business compared to Q3 as more virtual events in Q4 helped to reduce the effects of the fixed cost nature of our virtual events delivery team.

Lisa Thompson: ad agency who do you sell to are you selling to ad agencies or to the brands themselves

Lisa Thompson: We really don't have agency partners. In a big way, there's maybe a few referral partners that we have, but we directly sell to e-commerce sites. We directly sell to brands. It's direct sales.

Going forward, we have reduced these fixed cost to better align with our forecasted demand as we ramp up our AR and Metaverse businesses through 2022.

And does it contribute more significantly to our bottom line. We anticipate further increases in gross profit margins for that segment is much higher than the product sales and virtual events businesses.

Lisa Thompson: How far off do you think this business can be self-serve for the customer, where you don't even have to get involved and you just collect a check?

Operating expenses for Q4 were $8.5 million compared to $10 million in Q3 2021, a savings of $1.5 million. The decrease in operating expenses in the quarter was mainly due to lower expenses in sales and marketing and research and development. During the past couple of quarters, we've restructured our sales force and marketing spend.

Speaker Change: Uh, well, once we set the customer up, once we deliver the model.

Speaker Change: It is self-serve. It is just collecting a check. Once the models are live on the site, unless they want more models,

A more cost effective model for the new pursuits in AR sales with the intention of lowering overall sales cost as a percentage of revenue over the upcoming quarters, in addition to managing our product sales expectations as a result of COVID-19.

Speaker Change: We just collect a check as far as getting. Right. But making the more models though, is there going to be a point where they can make their own models just using your platform?

On supply chain issues.

Speaker Change: There's definitely the potential for some product categories to work that way. So for instance, the lay of the land, Lisa, is you have simple models, you have medium models, you have complex models, and then you have photorealistic models, right? So there's a wide spectrum of 3D out there. It's not all the same. So.

The decrease in development cost was the result of shifting our development focus to AR products, resulting in overall lower head count in this area.

General and administrative cost remained consistent however, we do anticipate lower expenses in this category going forward with ongoing cost cutting initiatives since the new year.

Overall head count is currently approximately 140 people down close to 50% from the peak in the summer of 2021.

We had a net loss in Q4 of $9.3 million compared to a loss of $8.2 million in Q3 due to non cash stock based compensation in Q4. However, once removed net loss for Q4 would be around $7.3 million.

Speaker Change: meaning simple, things like pillows, let's say, things like wall art.

Non cash stock based compensation in Q4. However, once removed net loss for Q4 would be around $7.3 million.

Speaker Change: things can be self-serve and on-demand. And that could happen.

A decrease of close to $1 million in losses.

Speaker Change: potentially in the second half of this year because that would just be AI driven.

As of December 31, 2021, we had cash of $7.2 million, inventory of $3.4 million and a positive working capital of $9.2 million. With the addition of the $10 million raised in January of 2020, we have close to $20 million of working capital to start the year in 2022, along with the results of our aggressive cost savings plan to reduce the cash burn to $1 million a month, we will not need access to capital for the next 12 months.

Speaker Change: And that is something that is highly scalable, and it's something that we are.

Speaker Change: kind of going after where the volume is very high and the cost is very low. So we don't charge as much either, right? So instead of it being, let's say, $10 per month per SKU, because our cost is so minimal, we could offer it for $5 per month per SKU or even $3 to $4 per month per SKU, but you're talking about tens of thousands of pillows and pieces of art kind of thing.

aggressive cost savings plan to reduce the cash burn to $1 million a month, we will not need access to capital for the next 12 months.

I would like to personally thank my finance and accounting team along with our internal business partners for all their hard work in making this happen over the last few months.

With that, I turn the call back over to Evan.

Thank you, Andrew. In closing, I would like to thank our employees, our shareholders of course, and our partners for their continued support as we remain focused on preserving and growing long term value for our shareholders. On behalf of Nextech, thank you for your support as always and thank you for taking the time to join us on this call. Operators, we are now ready for the exciting Question and Answer portion of this call.

Speaker Change: One question about expenses. What do you expect expenses to be in the first quarter given the cuts that you've taken?

Speaker Change: Andrew, if you can answer. Yeah, yeah, I mean, I think we, at the beginning of the quarter, I mean, we still saw a lot of savings and we're continuing down that path.

, thank you for your support as always and thank you for taking the time to join us on this call. Operators, we are now ready for the exciting.

Question and answer portion of this call.

Speaker Change: I wouldn't be surprised if we were, you know, another kind of million.

That is noted Sir. If you would like to ask a question at this time, please press star then the number one on your telephone keypad.

Speaker Change: below what we've had in Q4.

Speaker Change: Great. And does that continue, or is that where you've hit steady state? No. No, I think there's more room to go. I mean, again, our target is kind of $1 million burn per month, and we're going to be managing that against the revenue that's coming in, and it's going to be fluid in that.

If you would like to withdraw your question, press the pound key.

Yeah.

Our first question comes from the line of Scott Buck from H C. Wainwright. Your line is open.

Buck from H C. Wainwright your line is open.

Hi, good afternoon guys and I appreciate the time for a follow up and a lot of really good information on the call, Evan.

and a lot of really good information on the call, Evan.

A lot of really good information on the call Evan.

Really appreciate it.

Speaker Change: Alright, great. That's good to know. Okay, I think that's all my questions. Thank you. Thank you, Lisa.

First question for me.

I'm curious can you talk to us a little bit about what the other 3D modeling model offers are on some of the e-commerce platforms and how your product differs from theirs' and maybe what would direct somebody using that platform towards Nextech product versus a competitor?

Speaker Change: As a reminder, if you have questions, please press star 1.

Your product differs from from there and maybe what would direct.

Somebody using that platform towards.

Speaker Change: Our next question comes from the line of Michael Farah. Your line is open.

<unk> Tec product versus a competitor.

Sure, so it's a broad question, there's a lot of a lot of differences between Nextech and other 3D modeling companies. To summarize, I would say as we spoke, our business model is very different where our competitors essentially sell a 3D model. So, a 3D model, let's just say costs $50 dollars to make and our competitors will sell that for a $100 or $150. That's the standard business model in the industry. Nextech has taken a completely different tact and have aligned ourselves with E-Com merchants by turning our offering into a monthly subscription SaaS product. So don't pay us for the whole 3D model cost upfront. Pay us over the course of 12 months and by doing that, we're essentially partnering with these sites so that instead of paying let's say $150 in the example I just gave for a 3D model. Pay us $250 per month.

It's a broad question, there's a lot of alot of differences between Nextech and other 2D modeling companies. To summarize,

Michael Farah: Yeah, it's a pleasure to talk to you guys again. Just three quick questions. I don't know if I should just roll them off real quick, but do you see a point given the fact that most of the revenue, well, by the way, a fantastic presentation, Evan, keep the faith. I know the stock price at the moment is not even close.

A lot of differences between next tech and other three D modeling companies to summarize.

I would say.

As we spoke, our business model is very different where our competitors essentially sell a 3D model. So.

So, a 3D model, let's just say costs $50 dollars to make and our competitors will sell that for a $100 or $150. That's the standard business model in the industry. Nextech has taken a completely different tact and have aligned ourselves with E-Com merchants by turning our offering.

The dollars to make.

and our competitors will sell that for a $100 or $150. That's the standard business model in the industry. Nextech has taken a completely different tact and have aligned ourselves with E-Com merchants by turning our offering.

Michael Farah: I expect it to be more. But do you ever see a point where you would actually sell the e-commerce businesses, one or all of them? The second question is.

into a monthly subscription SaaS product. So don't pay us for the whole 3D model cost upfront.

Monthly subscription SaaS product, so adult pay us for the whole <unk> model cost upfront.

Michael Farah: How do you feel, do you feel it's strong? And will you be filing any new patents? And are there any competitor?

Michael Farah: uh... patents that are out there that you uh... make it off of that office action letters against that would say hey you know some of your claims a b c and d

Pay us over the course of 12 months and by doing that, we're essentially partnering with these sites so that instead of paying let's say $150 in the example I just gave for a 3D model. Pay us $250 per month.

Let's say $150 in the example I just gave for a 3D model pay us $250 per month.

Michael Farah: potentially selling uh... e-commerce business the patent portfolio and and what that landscape looks like and is there any pending litigation

And we'll supply you with 25 3D models, but you are signing a 12 month contract. So for Nextech, we get our ROI in month four, three or four essentially when we breakeven and after that we start essentially printing money.

But you are signing a 12 month contract. So for next tech we get our ROI.

Michael Farah: I'll start with the last first.

Michael Farah: So there's no material litigation, otherwise we, as a public company, would have to disclose that. As far as the.

month four, three or four essentially when we breakeven and after that we start

Essentially printing money.

Speaker Change: I think we're preparing to file, is it five patents, Andrew?

The other piece of it, Scott is we look to our additional let's just call them Add-On Features.

We look to our.

Additional let's just call them add on.

Speaker Change: Will these be provisional or will they be...

Features.

The configurator has become a runaway grand slam for us where you create one 3D model.

Andrew Chan: Non-provisional. It's actually disclosed in, I believe, our perspectives that was our shelf perspectives that was filed.

And using the configurator you're able to essentially change the colors of the 3D model and/or the design or the fabric if it's a couch just by pressing a button.

Speaker Change: Okay, so yeah, yeah, so my patents patents are coming and then as far as the e-comm business Who are your patent attorneys by the way

So, if you have, let's say a 100 different configurations of a single model.

By paying us $500 a month you could got one model plus the configurator and now you have a full on solution for that product and

You get you could got one model.

Plus the configure either and now you have a full on.

Speaker Change: Yeah, Mike, you can email me evidentnexttechar.com and we could talk offline about that, but as far as

solution for that product and.

Speaker Change: As far as the e-com business and selling it, yes, that is on the table as a possibility, not a definite, and or spinning it off as its own public company, in which case if we did something like that, shareholders would get some kind of a dividend. So yeah, those two things are on the table. We don't see it as a business that will own, let's say, five years from now.

it kind of just keeps going from there Scott. Where we also have Hotspots, we have a decorated show world. We have the ability to offer animations, we have a proprietary banner ad for Swirl ads.

Banner AD for Swirl ads and it's all.

And it all leads back to ARitize Metaverse Suite, where you log in and you get to essentially have a full spectrum of 3D product offerings for your E-Commerce site and our competitors just don't have that kind of breathe of product.

Speaker Change: but it could provide a good platform so that you might not have to dilute.

Speaker Change: uh... and revenue comes in and you strategically look at headcount and and

And they certainly don't offer the monthly payment terms that we offer.

Monthly.

Revenue the monthly payment terms that we offer.

Speaker Change: This is fantastic. It's definitely the next wave. I can't believe someone doesn't offer you guys $10 billion for it already.

That's very helpful Evan. Do you know off the top of your head or have some idea of how many customers that purchase models then come back 30, 60 days later and request some of these other services off the menu?

Speaker Change: uh... and i woke up and you know what if you get that i wouldn't take it

How many customers that.

purchase models then come back 30, 60 days later and request some of these other services off the menu?

Speaker Change: uh... because i think it's worth a lot more as this thing expands out there so many geopolitical factors and so many different things that are at play uh... and yeah i'll definitely go ahead email you about uh... the other part i understand will take

Services off the menu.

It's about 50% of the customers that try a <unk> model and then try a simple kind of <unk> model and then they come back.

Speaker Change: Thank you, Mike. Thank you for being so bullish. Appreciate it. Oh, you bet. Well, I appreciate it. I, I, uh, I see your vision.

Sure.

Additional services, where we're also noticing is that we do on a POC proof of concepts where people like Oh, let's try it out after people try it out we get 80% of those people converting into customers. So.

Speaker Change: well i've given up cute you know going on some of the social forms would like stock with him you know this guy's bad news that they've got a bunch

Speaker Change: We don't realize the vision that Evan has and his team has. The executive team is world class.

It is.

We're very bullish signs for.

For our industry.

Speaker Change: How many other companies can generate $25 to $30 million? Granted, it's Canadian, so you do the conversion, it's around a little over $20 million.

Great Thats helpful.

Mentioned some.

Rather large enterprise opportunities that you guys are working on do you have the capacity.

Speaker Change: uh... and that's really my last question is there any way and i understand because i have you know my background is law and i've dealt with the

To be able to fulfill all those requests or would that require.

Additional.

Speaker Change: uh... is there any way that in the reporting just i think a lot of you know

Software engineers developers anything along those lines that would dramatically impact the opex line.

Speaker Change: investors that live, you know, in English-speaking countries, it's a new way to actually, you know, right at the beginning

Yeah. So.

Good question.

We are a factory so we are scaling up.

Speaker Change: And here's what it is in U.S. dollars, because I think sometimes people get confused.

The demand comes in.

It does require us to build some.

Speaker Change: Yeah, I hear you. I'm going to talk to Andrew and we'll look into that.

New Tech we are continuing to build.

Build better and better technology that continues to allow us to have a competitive advantage in the market.

Speaker Change: It's a good, yeah, it's a good point. All right, Mike, thank you so much. Really appreciate it. You're welcome. Thank you so much for all your hard work, gentlemen.

So I would say that we're building at what were flying it or were flying it while we're building it.

Summarizes it where.

Speaker Change: There are no further questions at this time. I will now turn the call over back to Mr. Evan Gappelberg.

We have delivered for one customer at 2500 models in a month.

Evan Gappelberg: Well, thank you for joining me today. I appreciate all the investors that have joined and that are taking this journey with us into the metaverse.

Now.

To be quite honest.

That was difficult.

The heavy lift, but we did it.

Now <unk>.

Beyond that.

We're going to continue to scale and the goal is to be able to do significant volumes as we move into the second half of the year as we get more automation more AI more.

Speaker Change: Thank you again for participating. This concludes today's conference call. You may now disconnect.

Machine learning.

Under our <unk>.

Factory umbrella.

Speaker Change: ??? ??? ??? ??? ???

Alright that makes sense and last one for me.

A nice sequential tick higher on gross margin how should you as the business mix shift how should we be thinking about gross margins and what's the what's the ceiling.

Well I'm.

Im going to let Andrew take half of this but in general terms.

The business is shifting away from.

Managed services away from E Commerce.

E Commerce business is kind of there, but it's kind of on autopilot.

We don't spend a lot of time on it.

And a lot of resources, but when you look at the business that is growing which is software.

It's growing very rapidly and it has a much much higher margin. So over time, the margin is going to get better and better and better but I'll, let Andrew maybe dig into a little more detail.

Yes, Thanks Scott.

If you look at the margins for <unk>.

Our product sales I mean, the hover around the high 38% to kind of the low 42%, that's kind of where we see.

See that spot with the capacity that we.

We have or the sorry, the volume that we have at this point.

With COVID-19, and the supply chain issues, but.

Kind of taking it from kind of 40 something percent to kind of high 38 39.

In Q4, and I believe in Q3 as well.

The managed services business.

That was quite labor intensive as I had indicated through delivery and whatnot and so as that kind of levels off or.

The declines a little as we see the demand.

The positive contribution and what doesn't always saying about three D modeling <unk> models.

The model factory is I would say close to <unk>.

50% to 70% in terms of margin so.

We see more volume there I can only imagine our gross profit to increase.

Okay. That's perfect I appreciate it Andrew Thanks again, everyone.

The time for questions.

Thank you Scott.

Our next question comes from the line of Lisa Thompson from Zacks investments. Your line is open.

Hi, guys.

Okay.

So it looks like you've got e-commerce back to breakeven right.

And then that's where it's going to stay that the idea.

Yes, I mean, the E comm business like I said, it's kind of on autopilot at this point Lisa.

Okay. Good.

Oh.

So could you talk when you talk about.

Putting a bid out for well talk about.

Literally our the companies Youre bidding a barnes.

We can keep an eye on them.

So these are RFP.

<unk> means it's kind of a.

Closed loop.

You don't really know who your quote bidding against.

What I would say is that it's a very very small group.

Very small.

And that's what we're told.

It's just there's only a few companies at the table.

That are capable of delivering and I would say that on these on these whales. They put you through.

Different levels of testing our abilities.

Because these are sophisticated.

Some of these companies are trillion dollar public companies some of them are.

Hundreds of billions, but they are huge and so they're sophisticated and so.

I can say leases that.

We have put us through testing.

We've passed.

Quality.

Test.

Meaning they give you X number of models.

And they ask you to produce them and Theyre highly complex. These are not <unk>.

And so we have passed.

That test.

Okay.

So who do you run up against in general with two of its SKU when customers come to you. They say Oh, we tried xyz analogous try you.

Yes.

April .

Yeah. So what we found is.

There's really only two companies that we do.

<unk>.

And I would say that we're hearing less and less about them and I'll explain why one is a company called <unk> that has a configuration or.

And they do photo realistic <unk> model, they raised $35 million I think in a series B late last year another company called Mark said.

Which has been around for a while and both of those companies. If you go and you look them up and you do your research are very very heavily geared if not exclusively geared towards making.

<unk>.

Competing models or or providing solutions for the furniture.

Industry.

They do not venture.

Outside of that.

What makes Nic tech extremely unique.

We are actually providing three D models, not just for the furniture industry.

But for the sports industry.

Sporting goods.

For clothing.

For eyewear.

Sure.

Jewelry.

And.

Is it anybody that we run up against in those markets. We think we have.

Those markets to ourselves as crazy as it sounds.

There's nobody else that we run up against in those markets.

Okay.

When I look at what Youre doing now it seems like you are actually getting involved in building the model and it looks to me a lot like that.

That agency, who do you sell to or are you still like to add agencies or to the brands.

We don't we really don't have agency partners.

Wade.

A few referral partners that we have but we directly sell to e-commerce sites.

We sell two brands.

Direct sales.

Okay.

How fast do you think this business can be self serve customer where you don't even have to get involved and just collect the check.

Once we set the customer up once we deliver the models it is self serve.

Is just collecting the check we don't have to.

Once the models are live on the site unless they want more models.

Just collect the check as.

As far as kidney.

Making the more models now is there going to be a point, where they can make their own models just using your platform.

There's definitely the potential for some product categories.

To work that way so for instance, the law.

They are the land lease is you have simple models you have media models you have complex models and then you have photo realistic models right. So there's a wide spectrum of <unk> out there.

Not all the same.

So at the low end.

Simple.

Simple things like pillows website things like Walmart.

Those types of.

Things can be.

<unk> and <unk>.

On demand and that could happen.

Potentially in the second half of this year, because that would just be AI driven.

And that is something that is highly scalable and it's something that we are.

Kind of going after where the.

The volume is very high and the cost is very low so we don't charge as much either right. So instead of it being let's say $10 per month per SKU, because our cost is so minimal.

Could offer it for $5 per month per SKU, or even three to $4 per month per SKU, but youre talking about tens of thousands of.

Pillows and pieces of work kind of thing.

Mhm, Okay, good that should help.

One question about expenses.

<unk> expenses to be in the first quarter, given the cuts that you've taken.

Okay.

Hey, Andrew.

You can answer yes.

Yes, I mean, I think we at the beginning of the quarter I mean, we still saw a lot of savings and we're continuing down that path.

Yes.

I wouldn't be surprised if we were another kind of million.

Below what we've.

What we've had in Q4.

Great and does that continue or is that way.

Steady state no no I think there is there is more room to go I mean, our again, our target is kind of $1 million kind of burn per month.

We're going to be managing that against.

The revenue that's coming in and then it's going to be fluid in that sense.

Alright, great that's good tomorrow.

Okay, I think thats all my questions. Thank you.

Thank you Lisa.

Thanks Lisa.

As a reminder, if you have questions. Please press star one.

Our next question comes from the line of Michael <unk>. Your line is open.

Hey, good afternoon, gentlemen, how are we doing.

Doing good how are you doing Mike.

Good good yes, it's a pleasure to talk to you guys again, just three quick questions I don't know if I should just roll them off real quick, but do you see a point.

Given the fact that most of the revenue.

Oh by the way a fantastic presentation Evan.

Keep the pace.

I know that the half price at the moment is not.

Even close to reflective of what it will be.

I saw.

You were back.

On a price target of $2 50 by the end of the year.

I expect it to be more.

But do you ever see a point, where you would actually sell the e-commerce businesses, one or all of them.

Second question is.

Your patent portfolio.

How do you feel do you feel.

Neil it's strong and we will be filing any new patents are.

Are there any competitor.

Patents that are out there that you.

Make it off of that office action letters against that would say hey, some of your claims a b C and D.

So.

Potentially selling.

The ecommerce business the patent portfolio.

That landscape looks like and is there any pending litigation.

So.

I'll start with the pending I'll start with the last first so there's no material.

Litigation, otherwise, we as a public company would have to disclose that.

As far as the patents go.

I think we are preparing to file is it.

Andrew.

Yes.

It will.

<unk> provision or will they be.

Non non provisional.

Actually disclosed in.

I'll leave our prospectus that was our shelf prospectus.

File this morning.

Oh, Okay. So yes, yes.

Patents patents are coming and then as far as the E com business.

We always.

Patent attorneys by the way.

Or do you just go through the same.

Yes, Mike you can email me evident next tick <unk> dot com and we could talk offline about that but.

Sars is.

As far as the E com business and selling it yes that is on the table as a possibility not a definite <unk> spinning it off.

Its own public company in which case, if we did something like that shareholders would get kind of a dividend. So yeah. Those two things are on the table, we don't see it as a business that will own let's say.

Five years from now.

Yes.

But it could provide.

A good platform.

So that may not have to dilute yourselves or the company.

Revenue comes in and you strategically look at head count.

And the business model is just it's just fantastic, it's definitely that actually I can't believe someone doesn't Alberta, you guys $10 billion board already but.

And I will.

And what if you get that I wouldn't take it.

Because I think it's worth a lot more as this thing expands out theres. So many geopolitical factors in so many different things that are at play.

I will definitely go ahead and email you about.

Yes.

The other question I understand we will take that one offline.

Thank you Mike Thank you for being so bullish I appreciate it.

You bet.

I appreciate it.

I see your vision.

Sometimes.

Given up.

Going on some of the social forms with like stocked with.

This guy is that they've got a bunch of vaporware in them.

You don't realize the vision that Evan has and his team as the executive team is world class and what you guys have done from.

I mean, how many other companies can generate $25 million to $30 million granted just Canadian so you do that.

The conversion, it's around a little over $20 million, but.

And Thats really my last question is there any way and I understand because I.

My background is law and Ive dealt with the FCC and stuff like that but.

Is there any way that in the reporting.

Because I think a lot of.

Investors that live in English speaking countries.

No way to actually.

Right at the beginning.

Here's what it was.

And here's what it is in U S dollars, so because I think sometimes people get confused.

Yes.

Hear you.

I'm going to talk to Andrew and we will look into that.

Good yeah, it's a good point.

Mike. Thank you so much really appreciate it youre welcome. Thank you so much for all your hard work gentlemen.

Thank you ladies.

[laughter].

There are no further questions at this time I will now turn the call over back to Mr. Evan <unk>.

Well thank you.

Joining me today I appreciate.

All of the investors that have joined and then or are taking the journey.

With us.

To the meta versus everyone have a great evening. Thank you.

Thank you again for participating this concludes today's conference call you may now disconnect.

Yes.

Sure.

Yes.

Hi.

Okay.

Yes.

Certainly.

Yes.

[music].

Yes.

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